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HMRC internal manual

Trusts, Settlements and Estates Manual

Deceased persons: interests in residue: practical and computational aspects - excess expenses

TSEM7678 tells you how to compute residuary income. The expenses mentioned are deducted in the year in which they are paid.

Sometimes the allowable expenses in a particular year may exceed the income for that year. For years up to and including 1994-95 there was no statutory provision under which the excess could be set off against the income of any other year. Extra Statutory Concession A13 allowed the excess to be set off against the residuary income of an earlier or later year in the administration period for the purposes of higher rate tax only.

Extra Statutory Concession A13 was withdrawn with effect from 6 April 1995. It was replaced by a statutory provision, ITTOIA/S666 subsections (2) and (6) for non-corporate beneficiaries, and CTA 2009/S949 subsections (2) and (6) for corporate beneficiaries. This provides that excess expenses are carried forward for the purposes of computing residuary income for all tax purposes.

The excess expenses cannot, for any year, be set off against other income of the beneficiary.